Suppose that there is a negative aggregate supply shock and the central bank commits to an inflation rate target
A) If the commitment is credible, the public's expected inflation will remain unchanged.
B) Credible policy produces better outcomes on both inflation and output in the short run.
C) Policies that are not credible produce worse economic contraction.
D) all of the above.
E) both A and C.
D
You might also like to view...
The government can overcome the inefficiency created by a good with an external benefit by using
A) public provision. B) marketable permits. C) taxes. D) emission charges. E) None of the above answers is correct.
Refer to Table 2-4. What is Jack's opportunity cost of cultivating a garden?
A) one-half of a garden cultivated B) two lawns mowed C) two-thirds of a garden cultivated. D) one and a half lawns mowed
A good that has external benefits associated with its production will be
A. overproduced. B. underproduced. C. not produced. D. produced at the optimal level.
For a monopolist, if total revenue increases as output decreases, then marginal revenue is
A. positive. B. equal to price. C. zero. D. negative.